Opponents say the measure lacks a solid plan for replacing property tax revenues and robs citizens of control over their local governments.

North Dakota voters will end what has been a heated discussion on Nov. 5 when they decide whether to make Measure 4 a part of the state’s constitution and mandate the Legislature reimburse political subdivisions for the loss of property tax revenues.

Steven Moen of Minot, a member of the Measure 4 sponsoring committee, said the property tax is inequitable and has been rising rapidly. Although state property tax relief has mitigated the impact, his property tax has increased 248% over the past 12 years, Moen said.

If approved by voters, Measure 4 would require the Legislature to annually replace the amount levied by political subdivisions in 2024. The Legislative Council has estimated that amount at $3.15 billion per biennium, which doesn’t include bonded indebtedness of political subdivisions. Existing bond payments are an obligation that would need to continue until paid off.

Jill Schramm/MDN Measure 4 supporter Steven Moen displays a sign encouraging people to stop and ask questions during a promotional activity along Broadway by supporters Oct. 16.

Finding state funds

Senate Majority Leader David Hogue, R-Minot, has presented information regarding where the $3.15 billion might come from. It includes both budget trimming and increases in various state taxes.

However, measure supporters say the state has most of the $3.15 billion available from the Legacy Fund earnings and cuts to unnecessary spending. They argue overspending has bloated the state’s budget. For 2011-13, the Legislature approved a $10.6 billion budget that included $4.2 billion for the general fund. The 2023-25 budget totaled $19.6 billion, including $6.1 billion for the general fund.

Proponents list millions of dollars in increases made to state agencies and wasted money on a school bike program, tourism promotion, police recruitment and retention, childcare programs, creation of an office to recruit skilled immigrant labor, construction of a military museum, grants to individual businesses and more.

Beyond the 2025-27 biennium, legislators can choose to keep replacement dollars at the 2024 level indefinitely. But it would not be politically prudent to do so, Moen said. He said the Legislature could choose to add a cost-of-living adjustment going forward.

Joan Hollekim

Moen suggests people won’t miss the property tax any more than they miss the tax on personal property that was eliminated decades ago.

“There would be so much economic growth,” Moen said.

Moen said concerns about large out-of-state corporations receiving property tax breaks aren’t founded because those taxes are paid by consumers through their purchases. Renters also pay property taxes in their rent amount, he said.

“True local control is putting money in the people’s pocket, letting them control where it goes,” said state Rep. Jeff Hoverson, R-Minot, speaking as a citizen for Measure 4. “We don’t need a $19 billion budget to run our state. The proof is in South Dakota. South Dakota is very similar to us, and they operate their state on less than half that.”

He also objects to government foreclosure when taxes become delinquent for three years.

Howard “Bucky” Anderson

“I don’t think it’s right to force people to have to rent their home from the government. I think that’s just a very unfair, unethical tax,” Hoverson said.

Opposition widespread

Opposition to Measure 4 has come from a coalition of more than 100 organizations around the state. Known as Keep It Local ND, the coalition argues Measure 4 lacks a well vetted plan to replace $1.575 billion a year in property taxes. It also argues the Legacy Fund earnings already are committed to local governments, highways and other expenses and using the principal not only would deplete the fund but would require a constitutional amendment.

The North Dakota Rural Health Association Board released a statement about its concern that the Legislature would need to divert money from hospitals, nursing homes, mental health and other services to pay for Measure 4.

The ND UAS Council, representing unmanned aerial systems, took a stand against Measure 4, saying it threatens essential local services and puts the future of innovation and economic development at risk.

The North Dakota Farm Bureau gave its endorsement to Measure 4, while the North Dakota Farmers Union stands opposed.

“The freedom to own property is the foundation of our American Dream. We believe the passage of Measure 4 will enhance our freedom by removing valuation based taxation of our private property,” the Farm Bureau stated.

“Our members are firm believers in having a tax system that’s equitable,” said state Farmers Union President Mark Watne. “To have a measure that’s going to eliminate property taxes without a plan for how you’re going to replace that income stream for your local subdivisions is quite risky.”

He said leaving the revenue decisions to the Legislature also puts political subdivisions in a position of competing for dollars from a body in which urban interests have far more representation than rural interests.

The NDFU takes the position that there’s imbalance in North Dakota’s tax system and that property taxes need reform but not elimination, Watne said.

Measure 4 anxieties

Joan Hollekim, a Mountrail County commissioner and former county auditor, has concluded Measure 4 is wrong for North Dakota, based on her research, and has been speaking out as a citizen about her concerns.

Hollekim said Measure 4 would force decreased spending on state programs and projects while rewarding high-tax local governments and those that maxed out their levies in 2024. The inequity is apparent in school district levies, she said.

Four school districts have raised the levy for their general funds through a vote of their electors. The highest among them, the Fargo district, levied 126.78 mills for its general fund for 2023-24, according to N.D. Department of Public Instruction figures. The Minot district was at 69.85 mills, and 31 school districts levied fewer than 60 mills in their general funds.

“It will be rubber-stamped into our constitution, whether there’s waste in it or there’s inconsistencies in it,” Hollekim said.

She also questions whether $3.15 billion per biennium is sustainable in the long term.

“This whole measure provides so many uncertainties and unknowns, and it’s going to become constitutional law,” she said.

One county’s story

By state law, Mountrail County can not levy a property tax because its cash reserves from oil taxes and other revenue exceed 75% of appropriations.

“This measure only guarantees replacement dollars at the 2024 dollars levied. So, that would mean zero dollars coming into Mountrail County for perpetuity if this measure would pass,” Hollekim said. “Oil is not going to last forever. It is a volatile industry.”

The Legislature also could choose at any time to reduce the amount of oil taxes going to the producing counties, she said.

Other taxing entities in Mountrail County do levy. However, many won’t be able to raise alternate revenues to keep up with inflation if the state doesn’t increase its appropriations, Hollekim said. Emergency personnel, such as those who fought the wildfires this month, won’t be able to raise the dollars needed, she said. Currently, the cost of a pumper truck is at $560,000 and an ambulance $335,000, she said.

Measure 4 would eliminate centrally assessed taxes on utilities and pipelines, which make up 47% of Mountrail’s property taxes and a significant share of other taxing entities’ revenues across the state, she said. Pipeline companies paid nearly 30% of total taxes among McKenzie, Williams, Mountrail and Dunn counties, she said. Based on 2023 tax amounts, tax relief for pipelines would come to $1 billion every 20 years, her research shows.

In tax year 2023, Mountrail County’s top two taxpayers paid more than $2.7 million and the top 30 – primarily corporations – paid more than $11.1 million, she said.

Measure 4 doesn’t address growth and the need for expanding infrastructure when a large business comes to town, Hollekim added. Growth no longer would generate new property taxes, and there is no guarantee of increased revenue from the state, she said.

“This measure is too vague, and the potential fallout is too great,” Hollekim said. “Think of a small community that has such limited resources in sales tax or user fees or anything. I think it’s going to kill rural North Dakota.”

State wake-up call

Another county commissioner, Howard “Bucky” Anderson of Ward County, holds a different view as a citizen speaking on his own behalf.

He said the state has the money to replace property taxes, but the Legislature has been spending money unwisely on special projects. Too many lobbyists and influencers make change difficult, he said.

“The only way you can stop the spending is take away their money. And the way you take away their money is you take away property tax and make them pay that bill right up front to the citizens of North Dakota,” Anderson said. “It is radical, but it’s the only way you’re going to get government to wake up to what’s going on.”

Ending the property tax eliminates the effort and cost incurred in subjectively assessing property values and implementing property taxes, which is a savings for local governments, he added.

Concerns about tax breaks for large corporations could be addressed through imposing other types of taxes, he said. Proponents of Measure 4 also have stated an in-lieu-of tax could be charged to ensure railroads, pipelines and others still pay.

Anderson acknowledged that replacing property tax dollars at the 2024 level won’t be adequate in years ahead, forcing political subdivisions to generate new ideas for raising revenue at the local level. But he expects those revenue sources will be more fair and cost residents much less.

“This monster needs to go away,” he said of property taxes. “In the long run, as a conservative and a person who is against big government, it’s the best thing you can do for the economy of the state of North Dakota at this point.”

Regardless of whether voters embrace or reject Measure 4, legislators won’t have heard the last from either side.

Moen said supporters will be at the Legislature this winter to ensure Measure 4 is implemented properly or, if it fails, develop other tax reform that’s actually meaningful.

“They had a chance to fix it for the last 12 years, and they didn’t do it,” he said.